New IRS/Paypal Reporting Question

I asked a major shopping company about this new IRS law and here is the response I got:
"The 1099 we provide does not include reimbursement. You’ll get a 1099-K from PayPal. That is just a record of what was paid to you. That does not have to be filed with the IRS. The only thing you’ll need to file is any 1099’s you get directly from us."
Does someone here understand this new IRS/Paypal thing? I am about ready to just add up all my Paypal payments, submit it as extra income and be done with Mystery Shopping. I won't be making any money with it, so why bother?

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Get an accountant.

Ignore the form from PayPay. Don't enter it when you do your taxes. Just do what the MSC suggests and report their 1099s. Even better, keep your own records and ignore all the 1099s.

services.

Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing?

Beginning January 1, 2022, the Internal Revenue Service (IRS) implemented new reporting requirements for payments received for goods and services, which will lower the reporting threshold to $600 USD for the 2022 tax season, from 2021’s threshold of $20,000 USD and 200 transactions. Here’s some more detail:
1099-K Threshold Change:

This new Threshold Change is only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal for dinner, gifts, shared trips, etc.
This change was introduced in the American Rescue Plan Act of 2021, which amended some sections of the Internal Revenue Code to require Third-Party Settlement Organizations (TPSOs), like PayPal, to report goods and services transactions made by customers with $600 USD or more in annual gross sales on 1099-K forms. Currently, a 1099-K is only required when a user receives more than $20,000 USD in goods and services transactions and more than 200 goods and services transactions in a calendar year.

But when 75% of the payments I get on Paypal are for reimbursements, how does that work? Reimbursements are not taxable, but they are not separated in the amounts Paypal lists. At any rate, I am done with Secret Shops. It's costing me more than I make now.

That is why you have been keeping detailed records since you began doing mystery shopping. You are running a small business. Businesses keep records.

@cezovski wrote:

But when 75% of the payments I get on Paypal are for reimbursements, how does that work? Reimbursements are not taxable, but they are not separated in the amounts Paypal lists. At any rate, I am done with Secret Shops. It's costing me more than I make now.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

sounds like you are the person that takes the raising canes at $9 reimburse and $0 pay. :-P

@cezovski wrote:

But when 75% of the payments I get on Paypal are for reimbursements, how does that work? Reimbursements are not taxable, but they are not separated in the amounts Paypal lists. At any rate, I am done with Secret Shops. It's costing me more than I make now.

The best thing to do is ignore all 1099's after you check them for accuracy. Just keep your own records and check the 1099 to make sure it is correct based on your records. You may still get a 1099 from some companies that use paypal to pay you. Be careful you are not double counting the income...Unless of course you want to donate to the IRS. The issue with the 1099 from this industry is that some msc do include reimbursements so you really need to use your own records and be on your toes. You should have your personal spreadsheet or whatever accounting you have chosen to use.
I have not ever gotten a 1099 from paypal but my understanding is that you will get one combined 1099 and it will cover your total earnings for the year from where ever. If you know what you are doing then you do not need to change a thing from past years. If you do not know than you need to do some studying or hire someone who does know to help you.
Basically nothing has changed. You still need to report all earnings , deduct all legal expenses and reimbursements the same way you always have.

I have been selling online since the last millennium, but did not have the EIN and start deducting expenses until a few years ago. It really does give you tax advantages to be able to deduct expenses such as the new cell phone I just paid $1300 for. I keep a detailed excel file and all receipts. I have dedicated credit cards for mystery shopping expenses, products I buy to resell online, and one just for office expenses, etc. My Paypal deposits cover all my online shipping costs. I don't understand why people are freaking out so much over the tax laws being enforced. The tax code also has advantages.

When you actually fill out your income tax 1040 you will only pay taxes on earnings and not on reimbursements. If they send you a 1099 with it all lumped together then it is incorrect. If you have good records you will not have an issue separating your actual income from your reimbursements. I keep separate columns in my spreadsheet for fees and at the end of the year just simply press the sum button and that is my fee income. I do the same with my columns for reimbursements. I also have a column for bonuses which sadly is mostly blank . And of course a mileage column. Just sum them up and add them together as necessary on your schedule C. If the IRS or state get back to you and claims the 1099 is different your spreadsheet will explain it all in detail and that is what you will share with them.

@cezovski wrote:

But when 75% of the payments I get on Paypal are for reimbursements, how does that work? Reimbursements are not taxable, but they are not separated in the amounts Paypal lists. At any rate, I am done with Secret Shops. It's costing me more than I make now.

Yes, I keep a spreadsheet also...with separate columns as noted by the poster above, for payments and reimbursements. I still track my mileage on paper, although maybe next year I'll also do that on my spreadsheet...it's a good idea that I hadn't thought of! Anyhow, at tax time, I add up my payments and have that expense. Then I figure out my mileage deduction, and put all that together on my tax form.Plus, my husband and I being seniors on Social Security, I end up having no taxable income after doing the standard deduction thing, even after reporting my MS income. Technically, we don't even have to file our taxes because our total income threshold is lower than required to file, but I've filed my taxes for 55 years now, so it's hard to get out of the habit!!!

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